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Huawei Draws From Apple Playbook With Push on Apps to Narrow IPhone's Market Lead

Revenue at Devices Devision Growing 50% This Year to $30B, Says Huawei Chief

Published on June 02, 2016.

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As Apple Inc. reels from reporting its first revenue drop in 51 quarters due in part to falling iPhone sales, the chief of Chinese rival Huawei Technologies Co. sees revenue at his devices division growing 50% this year to $30 billion. To achieve that, he's pulling tips right out of Apple's playbook by making a push on apps.

"Apple's unique advantage has been its ecosystem -- we can learn from Apple to gather developers around us to build applications for our phones," Guo Ping, who is currently chief executive officer as part of a regular rotation at the helm of the company, said in an interview in Brussels, where he's due to speak at a conference Thursday. "We have our chances," he said about the company's ambition to grab the top spot in the smartphone industry.

While growth from selling devices -- smartphones but also smartwatches and tablets -- is slowing at Huawei along with the rest of the handset market, Mr. Guo thinks he can sway Apple and Samsung users to become the world's biggest phone vendor.

"How long it takes us to be number one will depend on how long it takes to convince you to switch from the iPhone to the Huawei P9," Mr. Guo said. "Apple has been slower at achieving new technological breakthrough. That leaves room for Huawei to get the next breakthrough."

Huawei's devices unit had 73 percent sales growth last year to $20 billion, and the privately owned group, which sells network equipment like routers in a separate unit competing with the likes of Ericsson AB and Cisco Systems Inc., had total revenue of about $61 billion in 2015. Mr. Guo said the company wants to differentiate to build up its brand, and part of that means it spent $9.2 billion on research and development last year.

Huawei launched a $1 billion plan last year to support software developers and encourage them to make more applications specific to its platform, a tweaked version of Google's Android dubbed Emotion UI.

To go for the crown of the world's most popular phone-maker, Huawei would also have to overtake Samsung, currently in the number one spot for global smartphone shipments. The Korean conglomerate's latest release, the Galaxy S7, helped it withstand the global smartphone slowdown in the latest quarter.

Samsung had market share of about 20 percent of global smartphone shipments in the second-quarter of 2015, according to the latest data by researcher IDC, compared to 14% for Apple and about 9% for Huawei. The research group lowered its predictions for global smartphone shipments this week and said it expects them to grow about 3% in 2016, slower than the 10.5% recorded the year before and 28% in 2014.

A boom in demand for smartphones and other electronic devices propelled Apple's annual revenue by $227 billion over 13 years until the company reported a slide in second-quarter sales last month, of 13% to $50.6 billion, as fewer people upgraded to the latest iPhone. It predicted another decline in the current period, casting a shadow over prospects for its biggest revenue generator.

Still, Huawei faces an uphill battle. While its P9 model smartphone has been praised for its hardware, including a dual-lens camera, the Emotion UI has been criticized in online reviews for being " heavy", pre-loading apps that duplicate Google's own, as well as straying too far off the original Android operating system.

Huawei last week said it's suing Samsung over technology fundamental to how mobile networks operate, and demanding royalties. "We have no intention to reignite patent wars in the tech industry," Mr. Guo said. "But we'll do what's necessary to protect our intellectual property including legal means."

While Huawei is going down the same route as Apple in seeking to get others to develop apps for its ecosystem, the company won't invest in a single application the way its U.S. rival invested $1 billion in China's Uber rival car-hailing service Didi Chuxing, Mr. Guo said.